BANK ONE CORPORATION
INDEX TO FINANCIAL REVIEW


1		Five Quarter Summary of Selected Financial Information
2		Application of Critical Accounting Policies
2		Summary of Results
6		Business Segment Results
6		Business Segment Results and Other Data
27		Balance Sheet Analysis
27		Risk Management
28		Liquidity Risk Management
28		Market Risk Management
30		Credit Portfolio Composition
34		Asset Quality
37		Allowance for Credit Losses
40		Derivative Financial Instruments
41		Loan Securitizations and Off-Balance Sheet Activities
44		Capital Management
46		Forward-Looking Statements
47		Consolidated Financial Statements
51		Notes to Consolidated Financial Statements
62		Selected Statistical Information
65		Report of Management
66		Review Report of Independent Public Accountants
67		Form 10-Q

FIVE QUARTER SUMMARY OF SELECTED FINANCIAL INFORMATION
Bank One Corporation and Subsidiaries

	Three Months Ended
(In millions, except per share data, ratios, and headcount)	June 30 2003			March 31 2003			December 31 2002			September 30 2002			June 30 2002
INCOME STATEMENT DATA:
Total revenue, net of interest expense	$	4,108		$	3,977		$	4,232		$	4,185		$	4,280
Net interest income		1,981			1,992			2,156			2,197			2,042
Net interest income-
fully taxable-equivalent basis ("FTE") (1)		2,020			2,029			2,192			2,235			2,078
Noninterest income		2,127			1,985			2,076			1,988			2,238
Provision for credit losses		461			496			628			587			607
Noninterest expense		2,425			2,320			2,390			2,420			2,444
Net income		856			818			842			823			843
PER COMMON SHARE DATA:
Net income:
Basic	$	0.76		$	0.71		$	0.73		$	0.71		$	0.72
Diluted		0.75			0.71			0.72			0.70			0.71
Cash dividends declared		0.21			0.21			0.21			0.21			0.21
Book value		19.70			19.44			19.28			18.79			18.37
BALANCE SHEET DATA - ENDING BALANCES:
Loans	$	144,583		$	144,747		$	148,125		$	150,389		$	147,728
Total assets		299,463			287,864			277,383			274,187			270,343
Deposits		172,015			167,075			170,008			164,036			157,518
Long-term debt (2)		46,070			44,950			43,234			42,481			43,756
Common stockholders' equity		22,257			22,316			22,440			21,925			21,563
Total stockholders' equity		22,257			22,316			22,440			21,925			21,563
CREDIT QUALITY RATIOS:
Annualized net charge-offs to average loans		1.35	%		1.35	%		1.65	%		1.55	%		1.62	%
Allowance to period end loans		3.35			3.31			3.20			3.17			3.19
Nonperforming assets to related assets (3)		2.28			2.38			2.38			2.48			2.65
FINANCIAL PERFORMANCE:
Return on average assets		1.24	%		1.22	%		1.24	%		1.24	%		1.32	%
Return on average common equity		15.3			14.7			15.0			14.8			15.7
Net interest margin		3.38			3.46			3.67			3.84			3.69
Efficiency ratio		58.5			57.8			56.0			57.3			56.6
CAPITAL RATIOS:
Risk-based capital:
Tier 1		9.7	%		10.0	%		9.9	%		9.5	%		9.4	%
Total		13.6			13.8			13.7			13.0			13.0
Leverage		8.7			8.9			8.9			9.0			9.1
COMMON STOCK DATA:
Average shares outstanding:
Basic		1,132			1,148			1,157			1,162			1,174
Diluted		1,140			1,156			1,166			1,171			1,184
Stock price, quarter-end	$	37.18		$	34.62		$	36.55		$	37.40		$	38.48
Headcount		72,323			74,077			73,685			73,535			73,579

(1)

Net interest income-FTE includes tax equivalent adjustments of $39 million, $37 million, $36 million, $38 million and $36 million for the quarters ended June 30, 2003, March 31, 2003, December 31, 2002, September 30, 2002 and June 30, 2002, respectively.

(2)

Includes trust preferred capital securities.

(3)

Related assets consist of loans outstanding, including loans held for sale, and other real estate owned.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Generally accepted accounting principles are complex and require management to apply significant judgments to various accounting, reporting and disclosure matters. Management of Bank One Corporation and its subsidiaries (the “Corporation”) must use assumptions and estimates to apply these principles where actual measurement is not possible or practical. For a complete discussion of the Corporation’s significant accounting policies, see “Notes to the Consolidated Financial Statements” in the Corporation’s 2002 Annual Report on pages 84-108. Certain policies are considered critical because they are highly dependent upon subjective or complex judgments, assumptions and estimates. Changes in such estimates may have a significant impact on the financial statements. Management has reviewed the application of these policies with the Audit and Risk Management Committee of the Corporation’s Board of Directors. For a discussion of applying critical accounting policies, see “Application of Critical Accounting Policies” beginning on page 35 in the Corporation’s 2002 Annual Report.

SUMMARY OF RESULTS
(All comparisons are to the same period in the prior year unless otherwise specified.)

Net income was $856 million, or $0.75 per diluted share. This compares to net income of $803 million, or $0.68 per diluted share, excluding the $40 million after-tax benefit from a restructuring charge reversal in the second quarter of 2002. Including this benefit, the prior year’s net income was $843 million, or $0.71 per diluted share. For the first half of 2003, net income totaled $1.7 billion, or $1.46 per diluted share. This compares to net income of $1.6 billion, or $1.35 per diluted share, excluding the $40 million after-tax benefit from a restructuring charge reversal in the second quarter of 2002. Including this benefit, the prior year’s net income for the first half of the year was $1.6 billion, or $1.38 per diluted share.

Net Interest Income

Net interest income represents the spread on interest earning assets over interest bearing liabilities, as well as loan fees, cash interest collections on problem loans, dividend income, interest reversals, and income or expense on derivatives used to manage interest rate risk. Net interest income was $2.0 billion, a decrease of $61 million, or 3%. Net interest margin decreased to 3.38% from 3.69%. For the first six months of 2003, net interest income was $4.0 billion, a decrease of $269 million, or 6%. Net interest margin for the same period decreased to 3.42% from 3.80%. For both the second quarter and the first half of 2003, approximately half of the decline in net interest income and margin resulted from actions taken in 2002 to position the Corporation more defensively against the possibility of rising interest rates. In 2002, the Corporation extended the duration of liabilities and repositioned the treasury investment portfolio, which reduced net interest income in 2003 due to the lower rate environment. Also contributing to the decreases were intentional reductions during 2002 in the Commercial Banking loan portfolio and throughout the period in certain Retail loan portfolios, with a modest impact due to yield compression in Card Services. See Note 7 for further details of the components of net interest income.

Noninterest Income

Noninterest income of $2.1 billion decreased $111 million, and as a percentage of total revenue decreased to 51.8% from 52.3%. For the first half of 2003, noninterest income of $4.1 billion decreased $95 million. For both periods, these decreases were primarily due to losses on the credit derivatives hedge portfolio and lower income derived from securitized loans. Partially offsetting the losses and lower income were net investment securities gains. The components of noninterest income for the periods indicated were:

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
Banking fees and commissions	$	458		$	493		$	(35	)		(7	)%	$	898		$	951		$	(53	)		(6	)%
Credit card revenue		911			962			(51	)		(5	)		1,762			1,871			(109	)		(6	)
Service charges on deposits		413			376			37			10			796			769			27			4
Fiduciary and investment management fees		186			188			(2	)		(1	)		372			377			(5	)		(1	)
Investment securities gains		152			96			56			58			221			78			143			N/M
Trading gains (losses)		(76	)		74			(150	)		N/M			(72	)		91			(163	)		N/M
Other income		83			49			34			69			135			70			65			93

Total noninterest income	$	2,127		$	2,238		$	(111	)		(5	)	$	4,112		$	4,207		$	(95	)		(2	)
Noninterest income to total revenue		51.8	%		52.3	%		(0.5)	%					50.9	%		49.8	%		1.1	%

Quarterly Results

Banking fees and commissions of $458 million decreased $35 million, or 7%. Lower premiums from credit insurance products, lower fees resulting from the intentional reduction of non-branded ATM machines and the elimination of the teller service fee were the primary drivers of this decrease. Partially offsetting the decrease was an increase in fixed income and asset-backed origination fees.

Credit card revenue of $911 million decreased $51 million, or 5%, primarily driven by lower yields earned on securitized loans, partially offset by higher interchange fees from increased card usage and increased securitization activity.

Service charges on deposits of $413 million increased $37 million, or 10%. This increase resulted from higher Retail deposit service charges and higher global treasury services revenue.

Net securities gains from treasury activities and the investment portfolios were $152 million, compared to net securities gains of $96 million. The prior year included the $261 million gain on the sale of the GE Monogram joint venture. Valuation adjustments included in each period’s net securities gains were primarily a result of changes in the value of the publicly traded equity market, the interest rate environment and economic conditions.

In the second quarter, trading produced losses of $76 million, a decrease of $150 million. This decrease resulted from the fair value decline in credit derivatives used to hedge the commercial loan portfolio and limit exposures to specific credits, partially offset by increased derivatives trading revenue.

Other income increased by $34 million, or 69%. The primary driver of this increase was gains on sales of loans totaling $14 million in the current quarter compared to losses of $22 million in the year ago quarter.

Year-to-Date Results

Banking fees and commissions of $898 million decreased $53 million, or 6%. This decrease was the result of lower premiums from credit insurance products and lower fees from the intentional reduction of non-branded ATM machines, partially offset by an increase in fixed income and asset-backed origination fees and higher syndication fees.

Credit card revenue of $1.8 billion decreased $109 million, or 6%. This decrease was primarily driven by lower income earned on securitized loans, modestly offset by higher interchange fees from increased card usage volume.

Service charges on deposits of $796 million increased $27 million, or 4%. This increase stemmed from higher Retail deposit service charges.

Net securities gains from treasury activities and the investment portfolios were $221 million, compared to net securities gains of $78 million. The prior year included the $261 million gain on the sale of the GE Monogram joint venture. Valuation adjustments included in each period’s net securities gains were primarily a result of changes in the value of the publicly traded equity market, the interest rate environment and economic conditions.

Trading losses of $72 million decreased $163 million. This decrease was primarily the result of losses on credit derivatives used to hedge the commercial loan portfolio and limit exposures to specific credits, partially offset by greater derivatives and foreign exchange trading revenue.

Other income of $135 million increased $65 million, or 93%, primarily the result of an increase in new securitization deals and gains associated with the sale of commercial loans and other assets.

Noninterest Expense

Total noninterest expense of $2.4 billion decreased $19 million, including a $63 million benefit from a restructuring charge reversal in the year ago quarter. Excluding this benefit, noninterest expense decreased $82 million, or 3%. The components of noninterest expense for the periods indicated were:

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
Salaries and employee benefits:
Salaries	$	1,048		$	941		$	107			11	%	$	2,040		$	1,861		$	179			10	%
Employee benefits		176			160			16			10			367			336			31			9

Total salaries and employee benefits		1,224			1,101			123			11			2,407			2,197			210			10
Occupancy		166			170			(4	)		(2	)		331			328			3			1
Equipment		118			99			19			19			229			202			27			13
Outside service fees and processing		289			372			(83	)		(22	)		566			672			(106	)		(16	)
Marketing and development		215			265			(50	)		(19	)		441			536			(95	)		(18	)
Telecommunication		55			134			(79	)		(59	)		103			235			(132	)		(56	)
Other intangible amortization		32			29			3			10			64			62			2			3
Other expense		326			337			(11	)		(3	)		604			637			(33	)		(5	)

Total noninterest expense before
restructuring-related charges (reversals)		2,425			2,507			(82	)		(3	)		4,745			4,869			(124	)		(3	)
Restructuring-related charges (reversals)		-			(63	)		63			N/M			-			(63	)		63			N/M

Total noninterest expense	$	2,425		$	2,444		$	(19	)		(1	)	$	4,745		$	4,806		$	(61	)		(1	)

Headcount		72,323			73,579			(1,256	)		(2	)
Efficiency ratio		58.5	%		56.6	%		1.9	%					58.1	%		56.4	%		1.7	%

Quarterly Results

Salaries and employee benefits increased $123 million, or 11%. This increase was due to higher base and incentive compensation, as well as higher benefit expenses, partially offset by a 2% reduction in headcount.

Equipment expense increased $19 million, or 19%, primarily due to increased depreciation expense on fixed assets acquired in the Corporation’s systems conversion efforts.

Outside service fees and processing expense decreased $83 million, or 22%. The prior year period included termination and renegotiation fees for certain vendor contracts and various servicing and contract programming charges for the Corporation’s systems conversion efforts.

Marketing and development expense decreased $50 million, or 19%, primarily due to decreased advertising expenditures for Card Services.

Telecommunications expense decreased $79 million, or 59%, due to the absence of servicing expenses resulting from terminating and renegotiating certain vendor contracts.

Other expense decreased $11 million, primarily related to lower operating and fraud expenses. Other expense includes freight and postage expense of $61 million and $63 million for 2003 and 2002, respectively.

Year-to-Date Results

Salaries and employee benefits increased $210 million, or 10%, due to higher base and incentive compensation and benefit expenses, partially offset by a reduction in headcount. The expense related to the fair value method of accounting for stock option and stock purchase plans for the six months ended 2003 and 2002 was $29 million and $12 million, respectively. The Corporation adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” in 2002.

Equipment expense increased $27 million, or 13%, primarily due to higher depreciation expense on fixed assets acquired in the Corporation’s systems conversion efforts.

Outside service fees and processing expense decreased $106 million, or 16%, as the Corporation continued to experience operational efficiencies resulting from renegotiated vendor contracts and the Corporation’s systems conversion efforts.

Marketing and development expense decreased $95 million, or 18%, primarily due to lower advertising expenditures related to Card Services.

Telecommunications expense decreased $132 million, or 56%, as a result of cost savings incurred through terminated and renegotiated vendor contracts.

Other expense decreased $33 million, or 5%, despite continued reinvestment in the Corporation’s infrastructure. This was a result of lower operating and fraud expenses. Other expense includes freight and postage expense of $123 million and $131 million for 2003 and 2002, respectively.

Provision for Credit Losses

Provision for credit losses was $461 million for the second quarter and $957 million for the first six months of 2003, compared to $607 million and $1.3 billion, respectively, for 2002. These decreases were mainly a result of improving credit quality. During the quarter, Commercial Banking also experienced a continued reduction in the size of its loan portfolio. This, along with improved credit quality, led to the decision to reduce Commercial Banking’s allowance for credit losses by $95 million. This decrease in the allowance for credit losses was partially offset by an increase of $85 million in the Corporate line of business related to the change in the overall risk profile of the non-core portfolios. These portfolios are discussed on pages 6 and 23-26.

Applicable Income Taxes

The Corporation’s income before income taxes, as well as applicable income tax expense and effective tax rate for each of the periods indicated were:

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2003		2002		2003		2002
Income before income taxes	$1,222		$1,229		$2,383		$2,371
Applicable income taxes	366		386		709		741
Effective tax rate	30	%	31	%	30	%	31	%

Applicable income tax expense for all periods included the benefit from tax-exempt income, tax-advantaged investments and general business tax credits, partially offset by the effect of nondeductible expenses.

BUSINESS SEGMENT RESULTS

The Corporation is managed on a line of business basis. The business segments’ financial results presented reflect the current organization of the Corporation. For a detailed discussion of the various business activities of the Corporation’s business segments, see pages 38-51 of the Corporation’s 2002 Annual Report.

The following table summarizes net income (loss) by line of business for the periods indicated:

	Three Months Ended June 30				Six Months Ended June 30
(In millions)	2003		2002		2003		2002
Retail	$ 373		$ 371		$ 768		$ 735
Commercial Banking	249		147		466		290
Card Services	279		308		527		547
Investment Management	85		103		165		204
Corporate	(130	)	(86	)	(252	)	(146	)

Net income	$ 856		$ 843		$ 1,674		$ 1,630

BUSINESS SEGMENT RESULTS AND OTHER DATA

The information provided in each of the line of business tables is based on management information systems, assumptions and methodologies that are under continual review by management. Information provided beginning with the caption entitled “Financial Performance” is included herein for analytical purposes only.

In the second quarter of 2003, the Corporation ceased origination of wholesale first mortgage and brokered home equity loans to focus on direct lending. In order to more clearly report the results of the core Retail businesses separate from the non-core businesses, the following portfolios were transferred to the Corporate line of business:

(In millions)		June 30 2003
Brokered home equity:
Previously reported as discontinued		$ 2,467
Remaining portfolio		6,618
Auto lease (and related portfolios)		2,906

Total transferred portfolios		$11,991

The Corporation is currently evaluating its alternatives with respect to these portfolios. All prior period data for the Retail and Corporate lines of business has been adjusted to reflect the transfer of these portfolios. See page 26 for a supplemental table of the transferred portfolios included in the Corporate line of business.

Retail
Retail provides a broad range of financial products and services, including deposits, investments, loans, insurance, and online banking to consumers and small business customers.

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002 (1)			Amount			Percent			2003			2002 (1)			Amount			Percent
INCOME STATEMENT DATA:
Net interest income-FTE (2) (3)	$	1,077		$	1,048		$	29			3	%	$	2,199		$	2,141		$	58			3	%
Banking fees and commissions (4)		175			187			(12	)		(6	)		364			392			(28	)		(7	)
Credit card revenue (5)		59			49			10			20			112			92			20			22
Service charges on deposits (6)		225			196			29			15			429			397			32			8
Other income		2			13			(11	)		(85	)		15			24			(9	)		(38	)

Total noninterest income		461			445			16			4			920			905			15			2

Total revenue, net of interest expense		1,538			1,493			45			3			3,119			3,046			73			2
Provision for credit losses		108			107			1			1			224			246			(22	)		(9	)
Salaries and employee benefits		407			379			28			7			793			763			30			4
Other expense		435			437			(2	)		-			892			891			1			-

Total noninterest expense before
restructuring-related charges (reversals)		842			816			26			3			1,685			1,654			31			2
Restructuring-related charges (reversals)		-			(18	)		18			N/M			-			(18	)		18			N/M

Total noninterest expense		842			798			44			6			1,685			1,636			49			3

Income before income taxes		588			588			-			-			1,210			1,164			46			4
Applicable income taxes		215			217			(2	)		(1	)		442			429			13			3

Net income (7)	$	373		$	371		$	2			1	%	$	768		$	735		$	33			4	%

FINANCIAL PERFORMANCE:
Return on average common equity		31	%		31	%		0	%					32	%		31	%		1	%
Efficiency ratio		55			53			2						54						54			-
Headcount		31,812			33,160			(1,348	)		(4	)%

ENDING BALANCES:
Small business commercial	$	9,775		$	9,568		$	207			2	%
Home equity		23,715			16,825			6,890			41
Vehicle		13,313			13,583			(270	)		(2	)
Other personal		6,902			7,733			(831	)		(11	)

Total loans (8)		53,705			47,709			5,996			13
Assets		56,900			51,408			5,492			11
Demand deposits		29,280			26,224			3,056			12
Savings		40,066			37,865			2,201			6

Core deposits		69,346			64,089			5,257			8
Time		19,486			24,623			(5,137	)		(21	)

Total deposits		88,832			88,712			120			-
Equity		4,774			4,774			-			-

AVERAGE BALANCES:
Small business commercial	$	9,724		$	9,534		$	190			2	%	$	9,695		$	9,489		$	206			2	%
Home equity		22,659			16,459			6,200			38			21,857			16,201			5,656			35
Vehicle		13,402			13,549			(147	)		(1	)		13,602			13,534			68			1
Other personal loans		7,108			7,904			(796	)		(10	)		7,596			8,616			(1,020	)		(12	)

Total loans		52,893			47,446			5,447			11			52,750			47,840			4,910			10
Assets		56,261			51,063			5,198			10			55,929			51,040			4,889			10
Demand deposits		28,809			25,921			2,888			11			28,206			25,544			2,662			10
Savings		40,107			37,806			2,301			6			39,842			37,464			2,378			6

Core deposits		68,916			63,727			5,189			8			68,048			63,008			5,040			8
Time		20,095			24,822			(4,727	)		(19	)		20,635			25,092			(4,457	)		(18	)

Total deposits		89,011			88,549			462			1			88,683			88,100			583			1
Equity		4,774			4,774			-			-			4,774			4,774			-			-

Retail – continued

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002 (1)			Amount			Percent			2003			2002 (1)			Amount			Percent
CREDIT QUALITY
Net charge-offs:
Small business commercial	$	16		$	18		$	(2	)		(11	)%	$	27		$	32		$	(5	)		(16	)%
Home equity		27			19			8			42			53			50			3			6
Vehicle		46			41			5			12			93			106			(13	)		(12	)
Other personal loans		24			29			(5	)		(17	)		42			55			(13	)		(24	)

Total net charge-offs		113			107			6			6			215			243			(28	)		(12	)

Annualized net charge-off ratios:
Small business commercial		0.66	%		0.76	%		(0.10	)%					0.56	%		0.67	%		(0.11	)%
Home equity		0.48			0.46			0.02						0.48			0.62			(0.14	)
Vehicle		1.37			1.21			0.16						1.37			1.57			(0.20	)
Other personal loans		1.35			1.47			(0.12	)					1.11			1.28			(0.17	)
Total net charge-offs		0.85			0.90			(0.05	)					0.82			1.02			(0.20	)

Nonperforming assets:
Commercial	$	255		$	251		$	4			2	%
Consumer (9)		315			289			26			9

Total nonperforming loans (9) (10)		570			540			30			6
Other, including other real estate owned ("OREO")		218			168			50			30

Total nonperforming assets		788			708			80			11
Allowance for credit losses	$	688		$	684		$	4			1
Allowance to period end loans (8)		1.33	%		1.48	%		(0.15	)%
Allowance to nonperforming loans (9) (10)		121			127			(6	)
Nonperforming assets to related assets (11)		1.46			1.48			(0.02	)

DISTRIBUTION:
Number of:
Banking centers		1,803			1,773			30			2
ATMs		4,093			4,956			(863	)		(17	)
Relationship bankers		2,823			2,333			490			21
On-line customers (in thousands)		1,922			1,269			653			51
Personal demand accounts (in thousands)		4,541			4,304			237			6
Business demand accounts (in thousands)		501			492			9			2
Debit cards issued (in thousands)		4,946			4,492			454			10

RETAIL BROKERAGE:
Mutual fund sales	$	774		$	637		$	137			22		$	1,351		$	1,217		$	134			11
Annuity sales		759			814			(55	)		(7	)		1,525			1,611			(86	)		(5	)

Total investment sales volume		1,533			1,451			82			6			2,876			2,828			48			2
Market value customer assets - end of period (in billions)	$	30.5		$	26.4		$	4.1			16	%
Number of customers - end of period (in thousands)		694			667			27			4
Number of dedicated investment sales representatives		874			761			113			15

N/M–Not meaningful.

(1)

Prior period data has been adjusted for the transfer of the non-core portfolios from the Retail line of business to the Corporate line of business.

(2)

Net interest income is presented rather than gross interest income and gross interest expense because the Corporation relies primarily on net interest income to assess the performance of the segment and make resource allocations.

(3)

Net interest income-FTE includes tax equivalent adjustments of $6 million and $5 million for the three months ended June 30, 2003 and 2002, respectively. For the six months ended June 30, 2003 and 2002, tax equivalent adjustments were $11 million and $10 million, respectively.

(4)

Banking fees and commissions include insurance fees, documentary fees, commitment fees, annuity and mutual fund commissions, leasing fees, safe deposit fees, official check fees, ATM interchange and miscellaneous other fee revenue.

(5)

Credit card revenue includes credit card fees in both the Card Services and Commercial lines of business, debit card fees, merchant fees and interchange fees.

(6)

Service charges on deposits include deficient balance fees, non-sufficient funds/overdraft fees and other service related fees.

(7)

Net income before restructuring-related reversals, net of $7 million tax, was $360 million and $724 million for the three and six months ended June 30, 2002, respectively.

(8)

Loans include loans held for sale of $2,067 million and $1,572 million at June 30, 2003 and 2002, respectively. These amounts are not included in allowance for credit losses coverage statistics.

(9)

Includes consumer balances that are placed on nonaccrual status when the collection of contractual principal or interest becomes 90 days past due.

(10)

Nonperforming loans includes loans held for sale of $2 million and $3 million at June 30, 2003 and 2002, respectively. These amounts are not included in allowance for credit losses coverage statistics.

(11)

Related assets consist of loans outstanding, including loans held for sale, and other real estate owned.

Retail – continued

Quarterly Results

Retail net income was $373 million, up $13 million, or 4% (excluding the $11 million after-tax benefit from a restructuring charge reversal in the prior year).

Total revenue, net of interest expense increased 3% to $1.5 billion. Net interest income was $1.1 billion, up 3%, primarily from growth in home equity loans and core deposits, partially offset by lower time deposits and spread compression. Noninterest income was $461 million, up 4%, as higher deposit service charges, debit card revenue, and investment sales were partially offset by the intentional reduction of non-branded ATM machines and the elimination of the teller service fee.

Noninterest expense was $842 million, up 3% (excluding the $18 million pre-tax benefit from the restructuring charge reversal in the prior year), primarily due to increased incentive compensation and commissions, as well as higher benefit costs. This increase was partially offset by lower fraud and other operating expenses.

The provision for credit losses of $108 million was relatively unchanged as higher net charge-offs in the real estate and vehicle portfolios were offset by lower net charge-offs in tax-refund anticipation and small business loans. As a percentage of average loans, net charge-offs were 0.85%, down from 0.90%.

The allowance for credit losses of $688 million represented 1.33% of period-end loans. Nonperforming assets were $788 million, up 11% from the prior year.

Year-To-Date Results

Retail year-to-date net income was $768 million, up $44 million, or 6% (excluding the $11 million after-tax benefit from a restructuring charge reversal in the prior year).

Total revenue, net of interest expense increased 2% to $3.1 billion. Net interest income was $2.2 billion, up 3%, primarily from growth in home equity loans and core deposits, partially offset by lower time deposits and spread compression. Noninterest income was $920 million, up 2%, as higher deposit service charges, debit card revenue, and revenues generated from the sale of student loans were partially offset by the intentional reduction of non-branded ATM machines.

Noninterest expense increased $31 million, or 2% (excluding the $18 million pre-tax benefit from the restructuring charge reversal in the prior year), primarily due to increased collections expenses, benefit costs, incentive compensation and production related expenses. This increase was partially offset by lower fraud and other operating expenses as well as other expense improvements.

The provision for credit losses was $224 million, down $22 million, or 9%, due primarily to net charge-off improvements in the vehicle, small business commercial, and tax related portfolios, partially offset by increases in home equity. As a percentage of average loans, net charge-offs were 0.82%, down from 1.02%.

Commercial Banking
Commercial Banking offers a broad array of products, including global cash management, treasury services, capital markets, commercial cards, lending and other noncredit products and services to corporate banking and middle market banking customers.

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
INCOME STATEMENT DATA:
Net interest income-FTE (3) (12)	$	574		$	598		$	(24	)		(4	)%	$	1,143		$	1,253		$	(110	)		(9	)%
Banking fees and commissions (4)		234			224			10			4			425			399			26			7
Credit card revenue (5)		27			20			7			35			50			34			16			47
Service charges on deposits (6)		185			173			12			7			360			357			3			1
Fiduciary and investment
management fees (13)		(1	)		-			(1	)		-			-			(1	)		1			N/M
Investment securities losses		(2	)		(1	)		(1	)		N/M			(2	)		(1	)		(1	)		N/M
Trading gains (losses) (14)		(75	)		81			(156	)		N/M			(58	)		107			(165	)		N/M
Other income (loss)		8			(43	)		51			N/M			18			(70	)		88			N/M

Total noninterest income		376			454			(78	)		(17	)		793			825			(32	)		(4	)

Total revenue, net of interest expense		950			1,052			(102	)		(10	)		1,936			2,078			(142	)		(7	)
Provision for credit losses		10			274			(264	)		(96	)		138			555			(417	)		(75	)
Salaries and employee benefits		295			261			34			13			572			520			52			10
Other expense		305			331			(26	)		(8	)		595			632			(37	)		(6	)

Total noninterest expense before
restructuring-related charges (reversals)		600			592			8			1			1,167			1,152			15			1
Restructuring-related charges (reversals)		-			(4	)		4			N/M			-			(4	)		4			N/M

Total noninterest expense		600			588			12			2			1,167			1,148			19			2

Income before income taxes		340			190			150			79			631			375			256			68
Applicable income taxes		91			43			48			N/M			165			85			80			94

Net income (15)	$	249		$	147		$	102			69		$	466		$	290		$	176			61

Memo-Revenue by activity:
Lending-related revenue	$	434		$	404		$	30			7	%	$	864		$	849		$	15			2	%
Credit derivative hedge portfolio		(143	)		33			(176	)		N/M			(197	)		-			(197	)		-
Global treasury services		395			399			(4	)		(1	)		785			828			(43	)		(5	)
Capital markets (16)		253			196			57			29			454			364			90			25
Other		11			20			(9	)		(45	)		30			37			(7	)		(19	)

FINANCIAL PERFORMANCE:
Return on average common equity		13	%		8	%		5	%					13	%		8	%		5	%
Efficiency ratio		63			56			7						60			55			5
Efficiency ratio excluding credit hedge portfolio		55			58			(3	)					55			55			-
Headcount:
Corporate banking
(including capital markets)		2,615			2,315			300			13	%
Middle market		2,491			3,023			(532	)		(18	)
Global treasury services		3,239			3,299			(60	)		(2	)
Operations, technology, and other administration		2,048			2,270			(222	)		(10	)

Total headcount		10,393			10,907			(514	)		(5	)

ENDING BALANCES:
Loans (17)	$	57,775		$	64,874		$	(7,099	)		(11)	%
Assets		108,226			94,348			13,878			15
Demand deposits		30,324			24,209			6,115			25
Savings (18)		9,332			7,496			1,836			24
Time (18)		9,110			4,019			5,091			N/M
Foreign offices		10,838			8,409			2,429			29

Total deposits		59,604			44,133			15,471			35
Equity		7,409			7,365			44			1

AVERAGE BALANCES:
Loans	$	58,046		$	67,011		$	(8,965	)		(13	)%	$	58,996		$	69,046		$	(10,050	)		(15)	%
Assets		98,325			94,423			3,902			4			95,696			96,794			(1,098	)		(1	)
Demand deposits		24,402			22,430			1,972			9			23,496			22,556			940			4
Savings (18)		10,005			7,416			2,589			35			9,659			2,900			6,759			N/M
Time (18)		3,529			5,083			(1,554	)		(31	)		5,783			13,404			(7,621	)		(57	)
Foreign offices		10,443			8,299			2,144			26			9,729			8,230			1,499			18

Total deposits		48,379			43,228			5,151			12			48,667			47,090			1,577			3
Equity		7,409			7,365			44			1			7,409			7,365			44			1

Commercial Banking – continued

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
CREDIT QUALITY
Net charge-offs	$	105		$	274		$	(169	)		(62	)%	$	233		$	555		$	(322	)		(58	)%
Annualized net charge-off ratio		0.72	%		1.64	%		(0.92)	%					0.79	%		1.61%			(0.82)	%
Nonperforming assets:
Nonperforming loans (19)	$	1,693		$	2,297		$	(604	)		(26	)%
Other, including OREO		22			30			(8	)		(27	)

Total nonperforming assets		1,715			2,327			(612	)		(26	)
Allowance for credit losses		2,976			3,071			(95	)		(3	)
Allowance to period end loans (17)		5.18	%		4.74	%		0.44	%
Allowance to nonperforming loans (19)		176			140			36
Nonperforming assets to related assets (11)		2.97			3.58			(0.61)

CORPORATE BANKING:
Loans-ending balance	$	29,319		$	31,773		$	(2,454	)		(8	)%
-average balance		29,222			33,322			(4,100	)		(12	)	$	29,809		$	34,600		$	(4,791	)		(14	)
Deposits-ending balance		32,730			22,929			9,801			43
-average balance		24,251			21,729			2,522			12			25,514			25,394			120			-
Credit quality:
Net charge-offs		63			168			(105	)		(63	)		144			331			(187	)		(56	)
Annualized net charge-off ratio		0.86	%		2.02	%		(1.16)	%					0.97	%		1.91	%		(0.95)	%
Nonperforming loans	$	705		$	1,161		$	(456	)		(39	)
Nonperforming loans to total loans		2.40	%		3.65	%		(1.25)	%

SYNDICATIONS:
Lead arranger deals:
Volume (in billions)	$	15.9		$	18.1		$	(2.2	)		(12	)%	$	30.7		$	33.0		$	(2.3	)		(7	)%
Number of transactions		95			70			25			36			141			115			26			23
League table standing-rank		4			4			-			-			4			4			-			-
League table standing-market share		6	%		5	%		1	%					6	%		5	%		1	%

MIDDLE MARKET BANKING:
Loans-ending balance	$	28,456		$	33,101		$	(4,645	)		(14	)%
-average balance		28,824			33,689			(4,865	)		(14	)	$	29,187		$	34,446		$	(5,259	)		(15	)
Deposits-ending balance		26,874			21,204			5,670			27
-average balance		24,128			21,499			2,629			12			23,153			21,696			1,457			7
Credit quality:
Net charge-offs		42			106			(64	)		(60	)%		89			224			(135	)		(60	)%
Annualized net charge-off ratio		0.58	%		1.26	%		(0.68)	%					0.61	%		1.30	%		(0.69)	%
Nonperforming loans	$	988		$	1,136		$	(148	)		(13	)%
Nonperforming loans to total loans		3.47	%		3.43	%		0.04	%

For additional footnote detail see page 8.

(12)

Net interest income-FTE includes tax equivalent adjustments of $25 million and $23 million for the three months ended June 30, 2003 and 2002, respectively. For the six months ended June 30, 2003 and 2002, tax equivalent adjustments were $48 million and $44 million, respectively.

(13)

Fiduciary and investment management fees include asset management fees, personal trust fees, other trust fees and advisory fees.

(14)

Trading gains (losses) primarily includes realized and unrealized mark-to-market changes from trading assets, derivative financial instruments and foreign exchange products.

(15)

Net income before restructuring-related reversals, net of $1 million tax, was $144 million and $287 million for the three and six months ended June 30, 2002, respectively.

(16)

Capital markets includes trading income and underwriting, syndicated lending and advisory fees.

(17)

Loans include loans held for sale of $327 million and $202 million at June 30, 2003 and 2002, respectively. These amounts are not included in allowance for credit losses coverage statistics.

(18)

Prior period amounts have been reclassified to conform to the current presentation.

(19)

Nonperforming loans include loans held for sale of $6 million and $103 million at June 30, 2003 and 2002, respectively. These amounts are not included in allowance for credit losses coverage statistics.

Quarterly Results

Commercial Banking net income was $249 million, an increase of $105 million, or 73% (excluding the $3 million after-tax benefit from a restructuring charge reversal in the prior year).

Commercial Banking – continued

The current period included a $143 million pre-tax loss on the credit derivatives hedge portfolio and the $95 million pre-tax reduction in allowance for credit losses. The prior year included a $33 million pre-tax gain on the credit derivatives hedge portfolio. Excluding the impact of the credit derivatives hedge portfolio and the allowance for credit losses release, net income was $280 million, an increase of $154 million. The improvement was driven by improved credit quality and strength in capital markets, partially offset by declining loan volumes and deposit margin compression.

Net interest income decreased 4% to $574 million, reflecting compressed deposit spreads from falling interest rates and a 13% reduction in average loan volume, partially offset by continued improvement in corporate banking and middle market loan spreads. In the corporate bank, loan volumes declined, reflecting decreased demand for financing as well as customers supporting their funding needs through public debt issuance.

Losses on the credit derivatives hedge portfolio negatively impacted trading income by $143 million in the current quarter, compared to a $33 million positive impact to trading income in the year-ago quarter. The current net notional amount of the credit derivatives hedge portfolio was $5.3 billion.

Noninterest income (excluding the impact of the credit derivatives hedge portfolio) was $519 million, an increase of $98 million, or 23%. This increase was primarily due to higher capital markets revenue, including fixed income and asset-backed originations and derivatives trading, gains on loan sales in the current quarter compared to losses in the prior year, and higher revenue from global treasury services.

Noninterest expense of $600 million was relatively flat. Expense management efforts during the past year held operating expenses relatively stable, despite higher compensation related expenses.

Credit quality continued to improve, as indicated by a $169 million, or 62%, decline in net charge-offs, as corporate banking gross charge-offs declined and middle market recoveries were higher than normal.

The improvement in credit quality and reduced size of the loan portfolio led to a $95 million reduction in the allowance for credit losses to $3.0 billion. Nonperforming loans declined 26% to $1.7 billion, reflecting declines of 39% in corporate banking and 13% in middle market banking.

Year-To-Date Results

Commercial Banking reported net income of $466 million, up $176 million, or 61%. The current year included a $197 million pre-tax loss on the credit derivatives hedge portfolio and a $95 million pre-tax reduction in the allowance for credit losses. Excluding the impact of the credit derivatives hedge portfolio and the allowance for credit losses release, net income was $531 million, an increase of $241 million. This improvement was primarily driven by improved credit quality and strength in capital markets, partially offset by the impact of declining loan volumes and deposit margin compression.

Net interest income was $1.1 billion, down $110 million, or 9%, reflecting a 15% reduction in average loan volume and compressed deposit spreads due to falling interest rates, partially offset by improved loan spreads.

Noninterest income (excluding the impact of the credit derivatives hedge portfolio) was $990 million, an increase of $165 million, or 20%, from the first half of 2002. This increase was primarily driven by higher revenue from a number of capital markets activities, gains on loan sales in the current year compared to losses in the prior year, gains in tax-oriented investments and increased revenue from global treasury services.

Ongoing expense management efforts held noninterest expense fairly flat at $1.2 billion, despite higher compensation related expenses.

Credit quality improved significantly from 2002, as demonstrated by a $322 million, or 58%, reduction in net charge-offs. The provision for credit losses was $138 million in 2003, and included a $95 million reduction in the allowance for credit losses.

Card Services
Card Services offers customers co-brand, affinity and other credit cards, including leading corporations, financial institutions, universities, sports franchises and affinity organizations. All of these cards carry the respective VISA^® or MasterCard^®brand names.

With more than 52 million cards in circulation, Card Services is the third-largest credit card provider in the United States and the largest VISA credit card issuer in the world. Card Services is also a leader in online card marketing and customer service, with more than 4.2 million registered users of its website.

Reported Basis

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
INCOME STATEMENT DATA:
Net interest income-FTE (3) (20) (21)	$	332		$	268		$	64			24	%	$	641		$	519		$	122			24	%
Banking fees and commissions (4)		9			17			(8	)		(47	)		20			42			(22	)		(52	)
Credit card revenue (5) (20)		825			891			(66	)		(7	)		1,599			1,744			(145	)		(8	)
Other income		34			28			6			21			30			10			20			N/M

Total noninterest income		868			936			(68	)		(7	)		1,649			1,796			(147	)		(8	)

Total revenue, net of interest expense		1,200			1,204			(4	)		-			2,290			2,315			(25	)		(1	)
Provision for credit losses		182			118			64			54			343			215			128			60
Salaries and employee benefits		156			142			14			10			309			288			21			7
Other expense		408			462			(54	)		(12	)		782			937			(155	)		(17	)

Total noninterest expense before
restructuring-related charges (reversals)		564			604			(40	)		(7	)		1,091			1,225			(134	)		(11	)
Restructuring-related charges (reversals)		-			(19	)		19			N/M			-			(19	)		19			N/M

Total noninterest expense		564			585			(21	)		(4	)		1,091			1,206			(115	)		(10	)

Income before income taxes		454			501			(47	)		(9	)		856			894			(38	)		(4	)
Applicable income taxes		175			193			(18	)		(9	)		329			347			(18	)		(5	)

Net income (22)	$	279		$	308		$	(29	)		(9	)	$	527		$	547		$	(20	)		(4	)

Memo-Net securitization gains
(amortization)	$	17		$	(13	)	$	30			N/M			18		$	(44	)	$	62			N/M

FINANCIAL PERFORMANCE:
Return on average common equity		18	%		19	%		(1	)%					17	%		17	%		0	%
Efficiency ratio		47			49			(2	)					48			52			(4	)
Headcount		10,751			10,298			453			4	%

ENDING BALANCES:
Owned loans:
Held in portfolio	$	6,308		$	5,115		$	1,193			23	%
Held for sale (23)		7,782			4,000			3,782			95

Total owned loans		14,090			9,115			4,975			55
Seller's interest and accrued interest receivable		24,414			21,897			2,517			11

Total receivables		38,504			31,012			7,492			24
Assets		43,597			34,002			9,595			28
Equity		6,361			6,361			-			-

AVERAGE BALANCES:
Owned loans:
Held in portfolio	$	7,085		$	5,393		$	1,692			31	%	$	7,435		$	5,186		$	2,249			43	%
Held for sale (23)		7,005			3,066			3,939			N/M			5,796			2,654			3,142			N/M

Total owned loans		14,090			8,459			5,631			67			13,231			7,840			5,391			69
Seller's interest and accrued interest receivable		23,281			21,916			1,365			6			24,861			22,216			2,645			12

Total receivables		37,371			30,375			6,996			23			38,092			30,056			8,036			27
Assets		42,886			34,467			8,419			24			43,529			34,610			8,919			26
Equity		6,361			6,361			-			-			6,361			6,361			-			-

Card Services – continued

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
CREDIT QUALITY:
Net charge-offs	$	182		$	118		$	64			54	%	$	343		$	215		$	128			60	%
Annualized net charge-off ratio		5.17	%		5.58	%		(0.41	)%					5.18	%		5.48	%		(0.30	)%
Delinquency ratio:
30+ days		3.22			2.72			0.50
90+ days		1.49			1.23			0.26
Allowance for credit losses	$	396		$	396			-			-
Allowance to period end loans held in portfolio		6.28	%		7.74	%		(1.46	)%

OTHER DATA:
Charge volume (in billions)	$	40.5		$	38.4		$	2.1			5	%	$	78.8		$	72.4		$	6.4			9	%
New accounts opened (in thousands) (24)		1,823			983			840			85			2,798			1,924			874			45
Credit cards issued (in thousands)		52,073			48,788			3,285			7
Number of CardmemberServices.com
customers (in millions)		4.2			2.6			1.6			62
Paymentech (in millions):
Bank card volume	$	37,258		$	30,076		$	7,182			24		$	71,702		$	58,037		$	13,665			24
Total transactions		1,342			1,016			326			32			2,560			1,956			604			31

Quarterly Results – Reported

Card Services’ net income decreased 6% to $279 million (excluding the $12 million after-tax benefit from a restructuring charge reversal in the prior year), primarily resulting from the continued competitive pricing environment.

Total revenue, net of interest expense remained flat at $1.2 billion. Net interest income increased 24% to $332 million, reflecting higher owned loan balances, partially offset by the impact of lower, more competitive yields. Average owned loan balances were $14.1 billion, an increase of $5.6 billion, or 67%, due to a lower percentage of securitized loans to managed loans in the current period. End of period owned loans increased $5.0 billion, or 55%, from the prior year.

Noninterest income declined 7% to $868 million, primarily driven by lower yields earned on securitized loans partially offset by increased securitization activity and higher charge volume. Noninterest income in both the current and prior year included modest gains from the sale of small portfolios.

Paymentech Inc., the Corporation’s merchant card processor, reported an increase in total revenue of 19% to $149 million, resulting from a 32% increase in total transactions and a 24% increase in bank card volume, driven primarily by the purchase of the Scotia Bank merchant acquirer business in the fourth quarter of 2002.

Noninterest expense was $564 million, a decline of 7% (excluding the $19 million pre-tax benefit from a restructuring charge reversal in the prior year), due to reduced marketing expenses. The Corporation reduced direct mail marketing expense but increased spending for existing customers.

Reported net charge-offs were $182 million, an increase of $64 million, or 54%. The reported net charge-off ratio was 5.17%, down from 5.58%. The reported 30-day delinquency ratio increased to 3.22% from 2.72% in the prior year.

The Corporation believes that it is more meaningful to discuss credit performance on a managed basis since the on-balance sheet portfolio has a greater percentage of new originations and, therefore, is less seasoned. See the Managed Basis section below for this information.

Year-to-Date Results – Reported

Card Services’ year-to-date net income decreased 2% to $527 million (excluding the $12 million after-tax benefit from a restructuring charge reversal in the prior year), primarily resulting from the continued competitive pricing environment partially offset by reduced marketing expenses and expense management.

Total revenue, net of interest expense decreased 1% to $2.3 billion. Net interest income increased 24% to $641 million, reflecting higher owned loan balances, partially offset by the impact of lower, more competitive yields. Average owned loan balances were $13.2 billion, an increase of $5.4 billion, or 69%, due to a lower percentage of securitized loans to managed loans in the current period.

Card Services – continued

Noninterest income declined 8% to $1.6 billion, primarily driven by lower yields earned on securitized loans and lower securitized loan balances partially offset by increased securitization activity and higher charge volume. Noninterest income in both the current and prior year included modest gains from the sale of small portfolios.

Paymentech Inc., the Corporation’s merchant card processor, reported an increase in total revenue of 16% to $283 million, resulting from a 31% increase in total transactions and a 24% increase in bank card volume, driven primarily by the purchase of the Scotia Bank merchant acquirer business in the fourth quarter of 2002.

Noninterest expense was $1.1 billion, a decline of 11% (excluding the $19 million pre-tax benefit from a restructuring charge reversal in the prior year), due to reduced marketing expenses and operational efficiencies.

Reported net charge-offs were $343 million, an increase of $128 million, or 60%. The reported net charge-off ratio was 5.18%, down from 5.48%.

Managed Basis

Through securitization, the Corporation transforms a substantial portion of its credit card receivables into securities, which are sold to investors. Securitization impacts the Corporation’s consolidated balance sheet by removing those credit card receivables that have been sold and by reclassifying those credit card receivables whose ownership has been transformed into certificate form (referred to as “seller’s interest”) from loans to investments. Gain or loss on the sale of credit card receivables, net of amortization of transaction costs and amortization from securitization repayments, is reported as securitization income in other income. Securitization also impacts the Corporation’s consolidated income statement by reclassifying interest income and fees, interchange income, credit losses and recoveries related to securitized receivables as securitization income. Credit card interest income and fees, interchange income, credit losses and recoveries related to credit card receivables that have been converted to certificate form are reclassified as investment income in net interest income.

The Corporation evaluates its Card Services line of business trends on a managed basis, which treats the securitization as a secured financing transaction and assumes that receivables are still on the balance sheet. The Corporation manages its Card Services operations on a managed basis because the receivables that are securitized are subject to underwriting standards comparable to the owned portfolio and are serviced by operating personnel without regard to ownership. The Corporation believes that investors should be informed, and often request information, about the credit performance of the entire managed portfolio in order to understand the quality of the Card Services originations and the related credit risks inherent in the owned portfolio and retained interests in securitizations. In addition, the Corporation funds its Card Services operations, reviews operating results and makes decisions about allocating resources, such as employees and capital, on a managed basis. See “Loan Securitizations” on page 41 and Note 9, “Credit Card Securitizations,” on pages 94-95 of the Corporation’s 2002 Annual Report for additional information related to the Corporation’s securitization activity.

Card Services – continued

The following table presents Card Services information on a managed basis.

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
INCOME STATEMENT DATA:
Net interest income-FTE (3) (20) (21)	$	1,488		$	1,526		$	(38	)		(2	)%	$	2,965		$	3,081		$	(116	)	$	(4	)

Banking fees and commissions (4)		9			17			(8	)		(47	)		20			42			(22	)		(52	)
Credit card revenue (5)		438			441			(3	)		(1	)		854			836			18			2
Other loss		34			28			6			21			30			10			20			N/M

Total noninterest income (21)		481			486			(5	)		(1	)		904			888			16			2

Total revenue, net of interest expense		1,969			2,012			(43	)		(2	)		3,869			3,969			(100	)		(3	)

Provision for credit losses (21)		951			926			25			3			1,922			1,869			53			3

Salaries and employee benefits		156			142			14			10			309			288			21			7
Other expense		408			462			(54	)		(12	)		782			937			(155	)		(17	)

Total noninterest expense before
restructuring-related charges (reversals)		564			604			(40	)		(7	)		1,091			1,225			(134	)		(11	)
Restructuring-related charges (reversals)		-			(19	)		19			N/M			-			(19	)		19			N/M

Total noninterest expense		564			585			(21	)		(4	)		1,091			1,206			(115	)		(10	)

Income before income taxes		454			501			(47	)		(9	)		856			894			(38	)		(4	)
Applicable income taxes		175			193			(18	)		(9	)		329			347			(18	)		(5	)

Net income (22)	$	279		$	308		$	(29	)		(9	)%	$	527		$	547		$	(20	)		(4	)%

Memo-Net securitization gains
(amortization)	$	17		$	(13	)	$	30			N/M		$	18		$	(44	)	$	62			N/M

FINANCIAL PERFORMANCE:
Percentage of average outstandings:
Net interest income - FTE		8.17	%		9.29	%		(1.12	)%					8.17	%		9.40	%		(1.23	)%
Provision for credit losses		5.22			5.64			(0.42	)					5.29			5.70			(0.41	)
Noninterest income		2.64			2.96			(0.32	)					2.49			2.71			(0.22	)
Risk adjusted margin		5.59			6.61			(1.02	)					5.37			6.41			(1.04	)
Noninterest expense		3.10			3.56			(0.46	)					3.01			3.68			(0.67	)
Pretax income - FTE		2.49			3.05			(0.56	)					2.36			2.73			(0.37	)
Net income		1.53			1.87			(0.34	)					1.45			1.67			(0.22	)

Return on average common equity		18			19			(1	)					17			17			-
Efficiency ratio		29			29			-						28			31			(3	)
Headcount		10,751			10,298			453			4	%

ENDING BALANCES:
Held in portfolio	$	6,308		$	5,115		$	1,193			23	%
Held for sale (23)		7,782			4,000			3,782			95
Securitized		35,832			35,797			35			-
Seller's interest and accrued interest receivable		24,414			21,897			2,517			11

Total loans		74,336			66,809			7,527			11

Assets		79,429			69,799			9,630			14
Equity		6,361			6,361			-			-

AVERAGE BALANCES:
Held in portfolio	$	7,085		$	5,393		$	1,692			31	%	$	7,435		$	5,186		$	2,249			43	%
Held for sale (23)		7,005			3,066			3,939			N/M			5,796			2,654			3,142			N/M
Securitized		35,664			35,555			109			-			35,116			36,070			(954	)		(3	)
Seller's interest and accrued interest receivable		23,281			21,916			1,365			6			24,861			22,216			2,645			12

Total loans		73,035			65,930			7,105			11			73,208			66,126			7,082			11

Assets		78,550			70,022			8,528			12			78,645			70,679			7,966			11
Equity		6,361			6,361			-			-			6,361			6,361			-			-

Card Services – continued

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
CREDIT QUALITY:
Net charge-offs	$	951		$	926		$	25			3	%	$	1,922		$	1,869		$	53			3	%

Annualized net charge-off ratio		5.21	%		5.62	%		(0.41	)%					5.25	%		5.66	%		(0.41	)%
12 month lagged (25)		5.77			5.86			(0.09	)					5.81			5.81			-

Delinquency ratio:
30+ days		3.95			3.83			0.12
90+ days		1.85			1.72			0.13

Allowance for credit losses	$	396		$	396			-			-

Allowance to period end loans held in portfolio		6.28	%		7.74	%		(1.46	)%

OTHER DATA:
Charge volume (in billions)	$	40.5		$	38.4		$	2.1			5	%	$	78.8		$	72.4		$	6.4			9	%
New accounts opened (in thousands) (24)		1,823			983			840			85			2,798			1,924			874			45
Credit cards issued (in thousands)		52,073			48,788			3,285			7
Number of CardmemberServices.com
customers (in millions)		4.2			2.6			1.6			62
Paymentech (in millions):
Bank card volume	$	37,258		$	30,076		$	7,182			24	%	$	71,702		$	58,037		$	13,665			24	%
Total transactions		1,342			1,016			326			32			2,560			1,956			604			31

For additional footnote detail see pages 8 and 11.

(20)

Net interest income-FTE did not have tax equivalent adjustments for the three and six months ended June 30, 2003 and 2002, respectively.

(21)

On a reported basis, income earned on securitized loans is reported in credit card revenue and income earned on seller’s interest is reported in net interest income. On a managed basis, net interest income, noninterest income and provision for credit losses are reported in their respective income statement lines.

(22)

Net income before restructuring-related reversals, net of $7 million tax, was $296 million and $535 million for the three and six months ended June 30, 2002, respectively.

(23)

On a reported basis, these amounts are not included in allowance for credit losses coverage statistics.

(24)

Net accounts opened includes originations, purchases and sales.

(25)

2002 ratio includes Wachovia net charge-offs but excludes Wachovia loans.

Quarterly Results – Managed

Total revenue, net of interest expense decreased 2% to $2.0 billion. Net interest income declined 2% to $1.5 billion, reflecting lower, more competitive yields, partially offset by the effect of higher managed loan balances. Average managed loans were $73.0 billion, an increase of $7.1 billion, or 11%. End of period loans increased $7.5 billion, or 11%, from the prior year.

Noninterest income of $481 million was essentially flat. The benefit of increased securitization activity and interchange revenue due to higher charge volume was offset by higher revenue sharing paid to partners (a deduction from revenue). Noninterest income in both the current and prior year included modest gains from the sale of small portfolios.

Managed net charge-offs increased $25 million, or 3%, to $951 million primarily driven by higher managed loan balances. The managed net charge-off ratio improved to 5.21% from 5.62%, aided in part by slightly higher than normal recoveries. The managed 30-day delinquency ratio, however, increased to 3.95% from 3.83% in the prior year.

Card Services – continued

Year-To-Date Results – Managed

Total revenue, net of interest expense decreased 3% to $3.9 billion. Net interest income decreased 4% to $3.0 billion, reflecting lower, more competitive yields partially offset by the effect of higher managed loan balances. Average managed loan balances were $73.2 billion, an increase of $7.1 billion, or 11%.

Noninterest income increased 2% to $904 million, primarily driven by increased securitization activity and interchange revenue due to higher charge volume partially offset by higher revenue sharing paid to partners (a deduction from revenue). Noninterest income in both the current and prior year included modest gains from the sale of small portfolios.

Managed net charge-offs were $1.9 billion, an increase of $53 million, or 3%, primarily driven by higher managed loan balances partially offset by slightly higher than normal recoveries. The managed net charge-off ratio was 5.25%, down from 5.66%.

Card Services – continued

The following table reconciles line items presented on a reported basis with those presented on a managed basis:

	Three Months Ended June 30				Six Months Ended June 30
(in millions):	2003		2002		2003		2002
INCOME STATEMENT DATA:
Net interest income - FTE (3) (21)
Reported data for the period	$ 332		$ 268		$ 641		$ 519
Securitization adjustments	1,156		1,258		2,324		2,562

Managed net interest income	1,488		1,526		2,965		3,081

Credit card revenue:
Reported data for the period	$ 825		$ 891		$ 1,599		$ 1,744
Securitization adjustments	(387	)	(450	)	(745	)	(908	)

Managed credit card revenue	438		441		854		836

Noninterest income:
Reported data for the period	$ 868		$ 936		$ 1,649		$ 1,796
Securitization adjustments	(387	)	(450	)	(745	)	(908	)

Managed noninterest income	481		486		904		888

Total revenue, net of interest expense:
Reported data for the period	$ 1,200		$ 1,204		$ 2,290		$ 2,315
Securitization adjustments	769		808		1,579		1,654

Managed total revenue, net of interest expense	1,969		2,012		3,869		3,969

Provision for credit losses
Reported data for the period	$ 182		$ 118		$ 343		$ 215
Securitization adjustments	769		808		1,579		1,654

Managed provision for credit losses	951		926		1,922		1,869

ENDING BALANCES:
Owned loans:
Held in portfolio	$ 6,308		$ 5,115
Held for sale (23)	7,782		4,000

Total owned loans	14,090		9,115
Seller's interest and accrued interest receivable	24,414		21,897

Total receivables	38,504		31,012
Securitized loans	35,832		35,797

Total managed loans	74,336		66,809

Assets:
Reported	$ 43,597		$ 34,002
Securitization adjustments	35,832		35,797

Managed assets	79,429		69,799

AVERAGE BALANCES:
Owned loans:
Held in portfolio	$ 7,085		$ 5,393		$ 7,435		$ 5,186
Held for sale (23)	7,005		3,066		5,796		2,654

Total owned loans	14,090		8,459		13,231		7,840
Seller's interest and accrued interest receivable	23,281		21,916		24,861		22,216

Total receivables	37,371		30,375		38,092		30,056
Securitized loans	35,664		35,555		35,116		36,070

Total managed loans	73,035		65,930		73,208		66,126

Total assets:
Reported	$ 42,886		$ 34,467		$ 43,529		$ 34,610
Securitization adjustments	35,664		35,555		35,116		36,069

Managed assets	78,550		70,022		78,645		70,679

CREDIT QUALITY:
Net charge-offs
Reported	$ 182		$ 118		$ 343		$ 215
Securitization adjustments	769		808		1,579		1,654

Managed net charge-offs	951		926		1,922		1,869

Investment Management
The Investment Management Group (IMG) provides investment, insurance, trust and private banking services to individuals. IMG also provides investment and investment-related services, including retirement and custody services, securities lending and corporate trust services to institutions. On July 24, 2003, the Corporation announced an agreement to sell the Corporate Trust Services business, part of the Investment Management line of business. The sale price is $720 million, of which approximately 10% is contingent upon business retention. The sale includes corporate, municipal, structured finance and escrow businesses as well as the document custody and London corporate trust operations. The closing of the transaction, pending regulatory approvals, is expected to occur later this year.

	Three Months Ended June 30												Six Months Ended June 30
							Change											Change
(Dollars in millions)	2003			2002			Amount			Percent			2003		2002			Amount			Percent
INCOME STATEMENT DATA:
Net interest income-FTE (3) (26)	$	100		$	105		$	(5	)		(5	)%	$	198	$	219		$	(21	)		(10	)%

Banking fees and commissions (4)		70			71			(1	)		(1	)		136		131			5			4
Service charges on deposits (6)		5			4			1			25			10		9			1			11
Fiduciary and investment
management fees		179			184			(5	)		(3	)		356		372			(16	)		(4	)
Other income		2			8			(6	)		(75	)		2		9			(7	)		(78	)

Total noninterest income		256			267			(11	)		(4	)		504		521			(17	)		(3	)

Total revenue, net of interest expense		356			372			(16	)		(4	)		702		740			(38	)		(5	)

Provision for credit losses		6			-			6			-			8		5			3			60

Salaries and employee benefits		120			111			9			8			237		227			10			4
Other expense		95			99			(4	)		(4	)		194		186			8			4

Total noninterest expense before
restructuring-related charges (reversals)		215			210			5			2			431		413			18			4
Restructuring-related charges (reversals)		-			(1	)		1			N/M			-		(1	)		1			N/M

Total noninterest expense		215			209			6			3			431		412			19			5

Income before income taxes		135			163			(28	)		(17	)		263		323			(60	)		(19	)
Applicable income taxes		50			60			(10	)		(17	)		98		119			(21	)		(18	)

Net income (27)	$	85		$	103		$	(18	)		(17	)%	$	165	$	204		$	(39	)		(19	)%

Memo-Consolidated gross insurance related revenues (28)	$	118		$	116		$	2			2	%	$	235	$	239		$	(4	)		(2	)%

FINANCIAL PERFORMANCE:
Return on average common equity		34	%		41	%		(7	)%					34		41	%		(7	)%
Efficiency ratio		60			56			4						61		56			5
Headcount		4,605			4,924			(319	)		(6	)%		4,605		4,924			(319	)		(6	)%

ENDING BALANCES:
Loans	$	6,842		$	7,088		$	(246	)		(3	)%
Commercial		3,277			3,378			(101	)		(3	)
Consumer		3,565			3,710			(145	)		(4	)

Assets		8,504			8,475			29			-

Demand deposits		3,015			2,398			617			26
Savings		5,143			3,887			1,256			32
Time		3,726			3,279			447			14
Foreign offices		256			282			(26	)		(9	)

Total deposits		12,140			9,846			2,294			23

Equity		992			992			-			-

AVERAGE BALANCES:
Loans	$	6,605		$	6,997		$	(392	)		(6	)%	$	6,680	$	6,990		$	(310	)		(4	)%
Commercial		3,049			3,294			(245	)		(7	)		3,099		3,294			(195	)		(6	)
Consumer		3,556			3,703			(147	)		(4	)		3,581		3,696			(115	)		(3	)

Assets		8,360			8,458			(98	)		(1	)		8,400		8,380			20			-

Demand deposits		2,199			2,003			196			10			2,127		2,035			92			5
Savings		5,122			4,044			1,078			27			5,010		3,897			1,113			29
Time		3,575			3,298			277			8			3,536		3,295			241			7
Foreign offices		184			222			(38	)		(17	)		171		208			(37	)		(18	)

Total deposits		11,080			9,567			1,513			16			10,844		9,435			1,409			15

Equity		992			992			-			-			992		992			-			-

Investment Management – continued

	Three Months Ended June 30												Six Months Ended June 30
							Change												Change
(Dollars in millions)	2003			2002			Amount			Percent			2003			2002			Amount			Percent
CREDIT QUALITY:
Net charge-offs:
Commercial	$	4		$	(1	)	$	5			N/M		$	5		$	1		$	4			N/M
Consumer		2			1			1			N/M			3			4			(1	)		(25	)

Total net charge-offs		6			-			6			-			8			5			3			60

Annualized net charge-off ratios:
Commercial		0.52	%		(0.12)	%		0.64	%					0.32	%		0.06	%		0.26	%
Consumer		0.22			0.11			0.11						0.17			0.22			(0.05)
Total net charge-off ratio		0.36			-			0.36						0.24			0.14			0.10

Nonperforming assets:
Commercial	$	67		$	33		$	34			N/M
Consumer		13			5			8			N/M

Total nonperforming loans		80			38			42			N/M
Other, including OREO		2			1			1			N/M

Total nonperforming assets		82			39			43			N/M

Allowance for credit losses		40			25			15			60
Allowance to period end loans		0.58	%		0.35	%		0.23	%
Allowance to nonperforming loans		50			66			(16	)
Nonperforming assets to related assets (11)		1.20			0.55			0.65

ASSETS UNDER MANAGEMENT
ENDING BALANCES:
Mutual funds	$	102,494		$	90,220		$	12,274			14	%
Other		68,395			55,767			12,628			23

Total assets		170,889			145,987			24,902			17

By type:
Money market		78,457			62,763			15,694			25
Equity		40,584			42,165			(1,581	)		(4	)
Fixed income		51,848			41,059			10,789			26

Total assets		170,889			145,987			24,902			17

By channel:
Private client services		43,236			46,414			(3,178	)		(7	)
Retail brokerage		7,924			7,184			740			10
Institutional		88,087			63,420			24,667			39
Commercial cash sweep		7,949			9,199			(1,250	)		(14	)
Capital markets		3,049			3,736			(687	)		(18	)
External (29)		11,601			7,492			4,109			55
All other direct (30)		9,043			8,542			501			6

Total assets		170,889			145,987			24,902			17

Morningstar® Rankings:
% of 4 and 5 ranked funds		53	%		51	%		2	%
% of 3+ ranked funds		91			91			-

CORPORATE TRUST SECURITIES
ENDING BALANCES (in billions):
Corporate trust securities
under administration	$	1,013		$	998		$	15			2	%

PRIVATE CLIENT SERVICES:
Number of private client advisors		634			668			(34	)		(5	)%
Number of private client offices		89			97			(8	)		(8	)

Total client assets-end of
period (31)	$	64,270		$	66,362		$	(2,092	)		(3	)

Ending balances
Loans		6,483			6,955			(472	)		(7	)
Deposits		10,071			8,226			1,845			22

Average balances
Loans		6,543			6,931			(388	)		(6	)	$	6,629		$	6,921		$	(292	)		(4	)%
Deposits		9,752			8,361			1,391			17			9,549			8,181			1,368			17

For additional footnote detail see pages 8, 11 and 17.

(26)

Net interest income-FTE did not have material tax equivalent adjustments for the three or six months ended June 30, 2003 and 2002.

(27)

Net income before restructuring-related reversals was $102 million and $203 million for the three and six months ended June 30, 2002, respectively.

(28)

Includes insurance related revenues recorded in other lines of business.

(29)

Includes broker/dealers, trust companies, and registered investment advisors that sell, or offer, One Group funds.

(30)

One Group funds invested in other One Group funds and other mutual funds sub-advised.

(31)

Fiduciary, brokerage and other related assets (managed and non-managed).

Investment Management – continued

Quarterly Results

Investment Management net income totaled $85 million, a decline of $18 million, or 17%, reflecting a shift in mix of assets under management, deposit spread compression and higher operating costs.

BANK ONE CORPORATION INDEX TO FINANCIAL REVIEW

Net Interest Income

Noninterest Income

Noninterest Expense

Provision for Credit Losses

Applicable Income Taxes

Retail – continued

Retail – continued

Commercial Banking – continued

Commercial Banking – continued

Reported Basis

Card Services – continued

Managed Basis

Card Services – continued

Card Services – continued

Card Services – continued

Card Services – continued

Investment Management – continued

Investment Management – continued

BANK ONE CORPORATION
INDEX TO FINANCIAL REVIEW